Anger at delay to gas market competition Bill

Click to follow
The Independent Online


Government ministers were accused last night of kicking their heels over the break-up of British Gas's monopoly and the opening up of the industry to competition.

The legislation paving the way for the start of competition, beginning in the South-west next April, was expected to have completed its passage through Parliament by the summer recess. This would allow all the companies wishing to enter the market, the Government and Ofgas, the regulator, to start thrashing out the fine detail.

Instead, the Government announced consideration of the Bill in the Lords would not end until mid-October. That delay, charged industry insiders, would make the April start date impossible and could even jeopardise the whole programme.

One industry source said: "The question is - has the Government shot itself in the foot on gas competition?"

The Gas Bill has already aroused controversy, having been subject to amendments in both Houses. While these could have delayed the Bill and made its completion impossible before the end of next week, the start of the recess, the Opposition is understood to have been willing to wave it through this time.

Talks between the Department of Trade and Industry and the Opposition earlier this week saw the Government climbdown on some of the outstanding issues. There was therefore nothing, a Lords source said, to prevent the Bill being passed.

Clare Spottiswoode, director general of Ofgas, is believed to be incensed by the delay and fears that rivals to British Gas may be unwilling to proceed with investment plans involving hundreds of millions of pounds. A Ofgas spokesman said: "We've done a lot of work to get things ready ... We are very perturbed at what has happened."

Until the Bill is passed, Ofgas is prevented from setting up a centre for licensing new market entrants and vetting them to make sure they will be reliable public gas suppliers. It could take until January to get the staff and systems in place. Until then, new suppliers will be unsure of their responsibilities and obligations.

An adviser to one of the industry entrants said he feared the necessary detailed discussions cannot now take place. He also envisaged problems over the framing of the "network code" governing the market and balancing supply and demand.

By delaying until November, the Government, he claimed, was not allowing enough time for these complicated reforms to be finalised. If the April deadline is missed, and the new system is not ready for its South-west trial until next summer, a looming general election, due in 1997, may mean competition being postponed indefinitely.

The trial was to bring competition to 500,000 homes, expanding to two million in 1997 and paving the way for a fully open market by the end of 1998.

The Government blamed pressure of parliamentary business for pushing the Bill into October. "There is always a queue of Bills at this stage in a session," a DTI spokesman said. "It is still our intention for competition in the South-west to commence on 1 April, 1996."

But there is also a view in the industry that the Government was never very keen on the Gas Bill. If Michael Heseltine, when President of the Board of Trade, had succeeded with plans to sell the Royal Mail, domestic gas competition would long ago have been left to languish on the back burner.